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3 June 2010

Voluntary Copyright Contracts and the Proposed Amendment

There are a number of provisions in the Amendment Bill which would affect copyright contracts, namely, assignments and licences of copyright. Some of these provisions (such as those which are proposed to be made to Section 17 of the Copyright Act, 1957) are aimed at regulating copyright contracts in the film and music industry. Other provisions are more general in nature, and would affect the entire spectrum of copyright contracts. These provisions of the Amendment Bill which deal with copyright contracts (not specific to the film and music industry) are amendments to Sections 18, 19, 19A, 30 and 30A of the Copyright Act, 1957.

Under Indian Copyright law, there are currently various kinds of copyright contracts. These contracts may be broadly divided into copyright licences and assignments. Section 18 of the Copyright Act deals with the “assignment of copyright”, Section 19 deals with the “mode of assignment”, and Section 19A deals with “disputes with respect to assignment of copyright”. Section 30A of the Act currently states that the provisions of Sections 19 and 19A of the Copyright Act which deal with assignments, shall, with necessary modifications also apply to (voluntary) copyright licences.

Thus, the provisions regarding copyright licences are laid out in Sections 18, 19 and 19A of the Copyright Act, 1957. However, it has been proposed to amend Section 30A of the Copyright Act, 1957, so that only Section 19, and not Section 19A, would apply to copyright licences.

(a) Modes of Exploitation

It has been proposed to amend Section 18 of the Copyright Act, 1957 to disallow the assignment of the copyright in works so as to enable the assignee to exploit the work through modes and media which are not in existence or in commercial use at the time the assignment is made unless those modes and media are specifically referred to in the assignment agreement.

The proposed amendment reads (in relevant part) as follows:

Amendment of section 18.
6. In section 18 of the principal Act, in sub-section (1), after the proviso, the following provisos shall be inserted, namely:—
“Provided further that no such assignment shall be applied to any medium or mode of exploitation of the work which did not exist or was not in commercial use at the time when the assignment was made, unless the assignment specifically referred to such medium or mode of exploitation of the work:

There has been some confusion at law as a result about what assigning a copyright means in terms of whether it means copyright has been assigned for the purpose of exploitation using only modes of exploitation existing at the time of the assignment or also using modes of exploitation subsequently created/developed. For example, would a 1965 assignment allow the copyright assigned to be exploited by Internet streaming which would not have been contemplated in 1965?

In Maganlal Savani v. Rupam Pictures (P) Ltd., [AIR 2000 Bom 416] with reference to an agreement between parties assigning the right of exploitation, distribution and exhibition of motion pictures, the Bombay High Court held that ‘exploitation’ includes exploitation by all scientific and technological devices that may be invented in future. In Raj Video Vision v. K Mohanakrishnan [AIR 1998 Mad 294], the Madras High Court held precisely the opposite. In that case, with reference to the assignment of video and television rights, it was held that a party could not have assigned rights which were not contemplated at the time of the original agreement (in 1961) at which time neither party could have dreamt of later scientific advancements, and that those rights could not have been granted by way of assignment.

This Section would significantly limit the scope of an assignment agreement although since it would not be possible to include in an assignment agreement a generic clause stating that all rights in respect of any particular work are assigned for the purpose of exploitation in any medium, manner or mode, and using any technology, whether or not currently in existence. This could present a problem for potential assignees since, considering the pace at which technology has evolved, it is not entirely practical (from their point of view) to state that an assignment agreement must specifically refer to all the possible modes and media of exploitation unless those modes exist at the time of the assignment.

Interestingly, however, this proposed amendment has been included in Section 18 of the Copyright Act, a Section which has thus far not, and is not proposed to apply to be made to copyright licences. What this effectively means is that, for all practical purposes, a copyright assignee would simply be able to “bypass” the restriction on the scope of an assignment which would be enshrined (if the proposed amendment were passed in its current form) in this Section by having potential assignors grant an exclusive licence to the would-be assignor instead of entering into an assignment agreement.

(b) Disputes with respect to Assignment of Copyright

Amendment of section 19A.
8. In section 19A of the principal Act, in sub-section (2), in the second proviso, for the words “Provided further that”, the following shall be substituted, namely:—
“Provided further that, pending the disposal of an application for revocation of assignment under this sub-section, the Copyright Board may pass such order, as it deems fit regarding implementation of the terms and conditions of assignment including any consideration to be paid for the enjoyment of the rights assigned:
Provided also that”.

(c) Royalties

Amendment of section 19
7. In section 19 of the principal Act,—
(i) in sub-section (3), for the words “royalty payable, if any”, the words “royalty and any other consideration payable” shall be substituted;
…………….

The Notes on Clauses state that ‘it is proposed to amend sub-section (3) so as to provide that the assignment shall specify the other considerations besides royalty, if any, payable’. Under the current Copyright Act, there has been some confusion about whether it is actually necessary to pay any royalty in consideration of an assignment made. Considering that an assignment is technically a Deed, and not a contract, it would seem that the interpretation that no consideration need be paid is accurate. It is, however, unclear what the purpose of the amendment proposed to Section 19(3) of the Copyright Act would be.

(d) Attribution of a Copyright Licence

Amendment of section 30.
13. In section 30 of the principal Act, for the words “writing signed by him”, the words “writing by him” shall be substituted.

Thus far, the Copyright Act has required that, in order to be valid, a copyright license must be signed by the licensor. It has been proposed in the amendment bill to remove the requirement that a copyright license be signed by the licensor. Presumably, it has been proposed to amend the Copyright Act in this manner to facilitate the grant of licenses via, say, electronic means such as via e-mail.

However, it is extremely unclear why a digital and / or electronic signature could not be made to serve the purpose. If it were possible to grant a valid license without signing it, it is extremely easy to conceive of situations where a supposed licensee may claim to have been granted the license on the basis of an unsigned document. As a general rule, agreements are signed so as to show the intent to be bound by them, and to attribute the agreement to the parties who sign them. If this agreement were to become law, it would be impossible to either attribute copyright licenses to particular persons or to be certain whether those persons intended to be bound by the (possibly draft) agreements.

As such, it would appear that if the proposed amendment were to become law, it would lead to a great deal of confusion at best and, at worst, it could, possibly, facilitate fraud.

(e) Additional Provisions

It has also been proposed to incorporate into the Copyright Act amendments to Sections 18 and 19 which would deal with specific subjects, namely: films, copyright societies. Though reproduced below, these provisions have been discussed in the Chapters which deal with “Films” and “Copyright Societies” but have, nonetheless, been reproduced here (in relevant part).

Films

Amendment to Section 18
Provided also that the author of the literary or musical work included in a cinematograph film or sound recording shall not assign the right to receive royalties from the utilisation of such work in any form other than as part of the cinematograph film or sound recording except to the legal heirs or to a copyright society for collection and distribution and any agreement to the contrary shall be void.
Amendment to Section 19
7(ii). after sub-section (7), the following sub-sections shall be inserted, namely:—
(9) No assignment of the copyright in any work to make a cinematograph film or sound recording shall affect the right of the author of the work to claim royalties or any other consideration payable in case of utilisation of the work in any form other than as part of the cinematograph film or sound recording.

Copyright Societies

Amendment of section 19
7(ii). after sub-section (7), the following sub-sections shall be inserted, namely:—
(8) The assignment of copyright in any work contrary to the terms and conditions of the rights already assigned to a copyright society in which the author of the work is a member shall be void.

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